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Cary School Board President Critiques New State Aid Bill

Critique of Senate Bill 1

First, its basic premise is that lower income districts should get more money and yet there is no recognition of how much is already being spent on a per pupil basis in some of these districts.

It fails to recognize the Law of Diminishing Returns.

That is, after a certain point of investment, the marginal return on that incremental investment approaches zero.

As an example, Chicago D-299 Instructional Spending per Pupil is $10,396 versus Cary D-26 of $5,494/pupil.

Given that Chicago is spending 90% more per pupil, just on instruction alone, does anyone believe that increasing that level any higher is going to yield positive results in Chicago?

The math holds true for almost all the big “winners” in this bill like: Waukegan, Elgin, Rockford, Cicero, Maywood, etc.

It does also create some winners downstate which is where the incremental funding truly would yield a favorable marginal return on investment.

For example, Decatur D-61 currently has an Instructional spending rate of only $5,147/Pupil.

Downstate districts like this are the ones that have felt the largest impact due to underfunding from the State.

So, given that the bulk of the incremental $350 million is allocated to districts where their Marginal Rate of Return on Investment has approached zero, one might conclude that the bulk of this money will yield virtually no favorable academic results.

Secondly, this new methodology sets up perfectly for the future to “redistribute the wealth” from the richer districts to the poorer districts.

If you’ll recall, the original SB-1 was written as a zero-sum game.

It took money from suburban districts and reallocated to the low-income districts.

By creating a lot of “Losers” in the collar counties, the bill went nowhere.

This revised bill sets up a need-based system that has a hold-harmless feature and then allocates an additional $350 million created by the tax increase.

It doesn’t create a long list of “Losers” like the old SB-1.

It creates a set of Tiers based on Funding Adequacy to funnel incremental dollars.

If you’re in Tier 1 or 2 you’ll receive an increase.

However, Tier 3 & 4 receive next to nothing.

I foresee this methodology being used in the future by the legislature to set up a tier structure to prorate funding.

In the past, when the State didn’t have the funds to make 100% of its General State Aid payments, it would prorate every district’s funding by 89%, for example.

The legislature’s only tool was to make every district suffer the pain at the same rate.

Now, under this new funding formula, its very easy to setup a tier structure to allocate cuts based on how a district’s Local Resources compare to its Adequacy Target.

Its easy to forecast that we’ll end up in exactly the same place as was projected under the original SB-1, with suburban districts as the “Losers” and low-income/downstate districts as the winners.

Chicago Public Schools (CPS) is a unit district (preschool – high school) whereas Cary Elementary District 26 is an elementary district (preschool – 8th grade).

High school districts have the highest costs, followed by unit districts, then elementary districts.

So one could expect the City of Chicago SD 299 to have higher costs than Cary just because it’s a unit district, and because it has more students that come from low income families.

The argument is even given the fact it’s a unit district and has more students receiving free and reduced fee lunches (a common measure of the number low income students in IL public schools), CPS still receives more than their fair share of state money allocated to public education.

That’s of little surprise given that political power seems to be a common indicator of the flow of government money in Illinois.

21% of the state’s population resides in Chicago as of the 2010 Census.

40% of the state’s population resides in Cook County.

52% of the Cook County population resides in Chicago.

++++++++++

Mr. Coffey’s prediction is likely correct given that that while Governor Rauner’s amendatory veto proposal for SB 1 is an improvement over the bill as it stands for districts outside of Chicago, the long term desire of most education reform groups is to give a larger percentage of state funding to property tax poor school districts.

Susan? You are wrong. There is no choice in the people that have to subsidize Medicaid. They are breaking our state apart. You DO have a choice to not send your children into government schools. You just don’t have a choice on keeping up your taxes to pay for their schooling scams.
Federal Farmer? Big Pharma RUNS this country.

AND we are back to square one. It all sucks. Nothing will ever happen to correct any of these inequities. We are grazing sheep awaiting the collapse – maybe then we can start over and learn from our pathetic history how to not get into this situation.

One’s share of the tax bite for everything is dependent on your personal income level and your property assessment in addition to what fee based government services you use and what products you purchase.

My argument relative to State Tax dollars for education is that when we approved the lottery we expected that money to be used for the schools (instead the old bait and switch) and I sure did not expect to have to pay extra for Chicago Schools!!!

Nob, The winning bidder’s package stated that Central One, LLC is looking to construct a commercial, multi-family and/or residential development on the property.

The process will ultimately determine the final results.

As to property taxes, every taxing body will see an increase in EAV due to new construction.

Each governing body can determine whether to capture the new growth or not in their future operating levy adoptions.

I would assume each taxing body’s financial position at the time the new growth comes on to the tax rolls would be a significant factor in whether to capture the new growth in the levy.

For those taxing bodies with a separate debt service levy, like D-26, the new growth will reduce every taxpayer’s share of the future annual debt service levy resulting in savings.

Assuming every taxing body ultimately captured the new growth in their levy once the project was completed, I would guess it would mean an extra $600K-$700K in annual property tax revenue to the community.

I do not know how to calculate the impact of the incremental value-added coming from increased economic activity from the new residents in the form of sales tax, water usage fees, utility fees, etc.

In Woodstock D200, the district receives a high financial profile score because it has long taxed over-aggressively, without regard for issues such as excess accumulation or deliberate over-taxation in Transportation Fund for the stated purpose of transferring excess monies into other rate-capped Funds.

Furthermore, Woodstock D200 itself has maintained a property tax rate of over 2.5% of homes’ fair market values, while homes in Chicago pay TOTAL property taxes of less than that amount, and the national average TOTAL property tax rate is around half that amount.

Furthermore Woodstock D200 has amassed debt far in excess of Illinois statutory maximum debt ratio; that is just considering the principal debt. When one adds in the accruing unpaid interest, the debt rises by over a third.

Furthermore D200 now pays OPEB of around $half a million, and declined to state a projection for accruing OPEB obligations.

Furthermore D200 has 53 IMRF Employees compensated higher than $75,000 as reported Pursuant to Illinois Public Act 97‐0609. (D200 has about 6400 students. Huntley D158 has one-and-a-half times as many students, but only 12 employees on the IMRF highly compensated report.)

Furthermore D200 maintains a special needs school courting tuition students–and charging them a tuition rate below the costs of hosting the students— at a deficit cost to D200 taxpayers, with 11 D200 students costing more than alternative placements and 59 out-of-district tuition students paying significantly less than actual cost of hosting these students.

Furthermore D200 operates 4 school buildings at around half enrollment capacity, or worse.

Finally the question:
Is there any way to get the standards for ISBE/State financial surveillance revised to meet real-world situations such as D200 presents?
This District will predictably fail at this expenditure rate, accruing these entitlement obligations, and with Woodstock’s property tax rate north of 4% stifling any hope of taxable development.
But like with those deferred interest bonds, the Financial Profile will look rosy right up until the maturity date of reality setting in.

Shouldn’t THESE metrics be included in Financial Profiles?…
Debt as ratio of EAV
Thorough debt disclosure including accruing/deferred interest (CABs)
Property tax rate relative to Chicago, Illinois, America mean/median/mode
OPEB obligations and projections 5-10 years out given known contractual entitlements
Unfunded TRS and IMRF pension obligations in case of Illinois bankruptcy